The Cost of Developing Large-Scale Software

The work of software cost forecasting falls into two parts. First we make what we call structural forecasts, and then we calculate the absolute dollar-volume forecasts. Structural forecasts describe the technology and function of a software project, but not its size. We allocate resources (costs) over the project\´s life cycle from the structural forecasts. Judgment, technical knowledge, and econometric research should combine in making the structural forecasts. A methodology based on a 25 X 7 structural forecast matrix that has been used by TRW with good results over the past few years is presented in this paper. With the structural forecast in hand, we go on to calculate the absolute dollar-volume forecasts. The general logic followed in "absolute" cost estimating can be based on either a mental process or an explicit algorithm. A cost estimating algorithm is presented and five tradition methods of software cost forecasting are described: top-down estimating, similarities and differences estimating, ratio estimating, standards estimating, and bottom-up estimating. All forecasting methods suffer from the need for a valid cost data base for many estimating situations. Software information elements that experience has shown to be useful in establishing such a data base are given in the body of the paper. Major pricing pitfalls are identified. Two case studies are presented that illustrate the software cost forecasting methodology and historical results. Topics for further work and study are suggested.